6 key principles of influence

Posted by Mar30, 2015 Comments Comments Off on 6 key principles of influence
Print Friendly, PDF & Email

Dr Robert Cialdini is the author of Influence: The Psychology of Persuasion. A short explanation of his work is that he says that we need to look for the six principals of persuasion when we work with a client. If one exists (i.e. it needs to exist naturally – it shouldn’t be manufactured), we should communicate it to the client and use it to our advantage. Last week I watched Dr Cialdini present webinar which reminded me of his excellent work. Below I summarise the six principals, some examples of what to look for and how to use them when dealing with clients.

  1. Reciprocity – People tend to return a favour, thus the pervasiveness of free samples in marketing. For example, a fast food restaurant provided visitors a free gift when they walked into the store: they gave people either a key ring or small tub of yogurt. The key ring saw people spend on average 12% more. The Yogurt resulted in a 24% increase in sales… why? Giving people something they want is more powerful. Obviously they were at the fast food restaurant because they were hungry – so a free gift of feed was more relevant/valuable.

Look for ways to add value and solve a client’s problems. Maybe offering a free RP Data report, offer to seek an interest rate discount at their existing bank, give them a book on property investing. Find a way to give first to enact the law of reciprocity.

  1. Commitment and Consistency – If people commit, orally or in writing, to an idea or goal, they are more likely to honour that commitment because of establishing that idea or goal as being congruent with their self-image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honour the agreement. An example is if you ask someone to sign a petition in support of a cause and then a week later you are that person to donate to support that cause, there’s a high likelihood of them donating.

Maybe asking the client upfront if they want to work with someone they trust to help them build wealth – is that something that they are looking for or appeals to them? Then, once you have demonstrated value you can revert back to their previous agreement as if to say “hey, you said you were looking for this… here it is”.

  1. Social Proof – People will do things that they see other people are doing. For example, in a restaurant they marked some items on the menu as “popular dishes”. As a result, sales of these dishes increased 18% to 20%.

Ask satisfied clients to write you a short testimonial and then send these to prospects. Date the testimonial because research shows that the more recent the testimonial is, the more powerful it is. A very successful accountant I know always answers the same way when a client asks him “how’s business”. He says “wonderful, we have never received so many referrals from our clients”. This shows good social proof.

  1. Authority – People will tend to obey authority figures. For example, Bose has some products that weren’t selling very well. They decided to advertise the opinions of some high-profile audio experts about how great these products were. Sales increased by over 60%.

Talk about how many clients you have helped. How many years’ experience you have. Your qualifications. That you are licensed (ACL). Try and establish authority in the early stages of contact with the prospect.

  1. Liking – People are easily persuaded by other people that they like. Cialdini cites the marketing of Tupperware in what might now be called viral marketing. People were more likely to buy if they liked the person selling it to them.

Be likeable, friendly, personal, caring, funny, find common ground, etc.

  1. Scarcity – Perceived scarcity will generate demand. For example, a supermarket advertised that customers were limited to “a quantity of only 3 items per person” resulted in a doubling of sales.

If you get an interest rate discount approved and the approval expiries within a certain time, tell the client. If a bank valuation is only relevant for a certain period of time, tell the client. If you expect fixed rates to change, tell the client.

Remember, the goal in not to manufacture or “invent” these factors to persuade the client to act i.e. if the interest rate discount doesn’t have an expiry – don’t make one up. That would be dishonest. However, the goal is to keep your eye out for these factors that do influence clients and when one exists, use it to your (and ultimately the clients) advantage.

For more, go here.


Categories : Uncategorized
Comments Comments Off on 6 key principles of influence

Have you earned the right for a call back?

Posted by Mar15, 2015 Comments Comments Off on Have you earned the right for a call back?
Print Friendly, PDF & Email

You completed a refinance for your client, Mario 2 years ago with ANZ and he has a 1% interest rate discount. Mario runs into a friend at a BBQ. This friend tells Mario that CBA has given him a 1.20% discount for a smaller loan amount than Mario has. What do you expect Mario to do? What can you do that ensures Mario calls you before taking any action?

This blog isn’t about discounts and being rate-focused – because that’s a race to the bottom and I’m not interested in winning that race. This blog is about how to build strong relationships that are impenetrable by price competition from banks and other brokers.

A farmer starts by sowing seeds to grow his crop. He will spend many months caring for the crop – watering, feeding, etc. to help it grow into a dense and lush crop. Some day he will harvest the crop and enjoy the spoils – but until that day, the entire investment of time and money is in one direction – into the crop.

Client relationships are the same. You need to invest in them. Invest time and energy and sometimes money – even though, or especially when, there’s no immediate payoff. In fact the payoff might be many years away. When was the last time you called some clients just to check in and say hello? Give them a valuable resource or tool. I’m not talking about an annual review call (I.e. When you’re looking for an additional lending or refinance opportunities). I’m talking about a call with zero self-interest. Investing some of your time… your most valuable asset. The best time to do this by the way is 3-6 months post settlement because the client will realise that you can’t expect there to be additional opportunities – they know you’re genuinely calling just to check in, out of care.

So if you have done the disciplined work of previously investing in your relationship with Mario, when he hears about higher discounts at CBA, you will be his first point of call. He’ll be guided by your advice, not necessarily by the lower rate. BUT, if you haven’t invested in the relationship, don’t blame Mario if he refinances to CBA without your involvement or knowledge. Why should Mario call you? You have never bothered to call him!

Our business is all about personal relationships. It always has been and always will be. That’s why Woolworths Money (in the news today… they are hiring lending staff) is no threat to brokers that build relationships with their clients. Nor are online lenders, banks and other brokers.

How much of your time each day is spent sowing the seeds for tomorrow as opposed to harvesting for today? This is the secret to building a super-strong broking business. Not rocket science but it takes a lot of discipline. Many brokers aren’t willing to do this hard work.

Categories : Uncategorized
Comments Comments Off on Have you earned the right for a call back?

No one will value your time until you do. Is your time really free?

Posted by Jan31, 2015 Comments Comments Off on No one will value your time until you do. Is your time really free?
Print Friendly, PDF & Email

I’d bet that you hate it when a client doesn’t value or appreciate your time, right? Time wasters, people that bleed you for your knowledge and advice, procrastinators – there’s lots of examples of clients that don’t value their broker’s time. But there’s something you can do about it.

A broker told me a really interesting story this week. This broker was doing a loan for his cousin. Once the loan settled, his cousin approached him and asked “what’s your fee? How much do I owe you? I’m really happy with your work and I want to pay you.” Of course the broker said that there’s no fee because he earns a commission. The cousin insisted and so did the broker. No fee was paid. About 6 months later the broker was doing a second transaction for the cousin. This time around the cousin became very demanding and largely un-appreciating of the broker’s time. I wonder if this would have happened if the broker had have charged a fee in the beginning? Probably not.

I believe that fees are a necessity in business if you want your clients to truly value your service. Mortgage broking has evolved into much more than just comparing rates and filling out forms. Without a client having to dip into their pocket, they really just don’t and won’t truly value your time and advice partly because you obviously don’t (otherwise you would charge a fee). So my advice to you is design a valuable service that you can charge a fee for and try and sell it to every client. Maybe your basic service can still be at no charge but if they want the value adding stuff, they need to pay. If you are not confident, set the fee low (but not too low) and then raise it as your confidence grows. The more you charge, the more value the clients will see. And ironically the more referrals you’ll get too.

The clients that take up a fee-based service will almost always be more loyal and more profitable (and less rate sensitive). The clients that don’t take up the service probably won’t be good clients anyway. Introducing a fee will allow clients to essentially “self-select” i.e. do something that then tells you if they will be good, loyal, long-term clients or not. You then know which clients to invest time into.

The additional revenue is good but not really the main reason. The predominant reason for charging a fee in my opinion is to attract clients that truly value your advice and relationship. A great broker can make their clients wealthy and we need to teach our clients to value that (and most importantly, value it ourselves).

Any questions or comments email me: stuart at brokerrevolution dot com dot au.


Dave Evans wrote: Then the $64,000 question is – how much should a broker charge? I agree with your article. Since is moved into broking (my own company) from mobile lending from a bank – I visit people who just want info for free and how I should structure my loans and then they just go back to their bank, and I waste $50 in petrol and my time. So how much is acceptable to charge?

Stuart’s response: Hi Dave, thanks for your question – it’s a good one. I think you have a few options. You could charge a commitment fee (say $200-$700) which is payable for you to come and see clients and provide credit advice. Perhaps if they settle a loan within 3-6 months of you seeing them you might offer a full or partial refund of the fee? This will be a good “qualifier” – to ensure they are serious and appreciate your time/advice. In addition to this, you might charge an addition fee for more complex advice (i.e. advice that related to property invest/strategy for example – i.e. the value added stuff that us brokers usually talk to clients about that isn’t directly related to loans but helps the client make smart decisions and build wealth). You might provide some cash projections (from some property software) and RP Data reports, etc. Some brokers charge $300 to $800 for this service. You are then positioning yourself as more than just a mortgage broker. I don’t think the size of the fee matters that much… a few hundred dollars will be enough to force the client to appreciate your time/value. Of course, just make sure you are suitably qualified and/or experienced and have true and honest value to share with clients.

Categories : Uncategorized
Comments Comments Off on No one will value your time until you do. Is your time really free?

Turnover is vanity, profit is sanity, cash is reality!

Posted by Jan06, 2015 Comments Comments Off on Turnover is vanity, profit is sanity, cash is reality!
Print Friendly, PDF & Email

This is the quickest lesson in business: Turnover is vanity, profit is sanity, cash is reality!

I find our industry is too obsessed with lodgements and settlements… that’s all vanity.

Things like lodgements, # of new leads, # of client meetings, hours worked per week are all vanity. That is, lots of brokers like to talk about how much they lodged, how busy they are and how many hours they work but it’s really not always that meaningful or important.

For example, what about if I pay large referral fees (commission splits)? Am I really making any profit after I account for the amount of time it takes to write the deal? If it takes many months and hours of work to get refinances to settle then are you really making money? Is my average loan size high enough to compensate me for the hours I work? There are lots of businesses out there with millions of dollars in turnover that are making very little profit, if any! What the point of that?

The amount of hours it takes to win a client and settle the deal is sanity. You get some deals where a client calls up and needs to borrow $1m because they bought a property on the weekend on a 30 day settlement – that is highly profitable! Perfect. Compare that to a client that is a serial pest, asks millions of questions and is all over the place. No one’s making any money there. That’s insanity. Profit is sanity because without it, you don’t survive.

Cash is the amount of money left in the bank at the end of the month after paying for all expenses and that’s reality. Who cares if you have awesome lodgements and profitable clients if you always finish the month without any money in this bank?!?! Cash is the lifeline of any business.

Hopefully you will sit down and do some business planning in January to plan out your year. When you do this you need to think very carefully about this formula: turnover is vanity, profit is sanity, cash is reality. Specifically, you need to define and focus on a profitable niche target client/market and then develop a proven sales system that is designed perfectly for your target market. This will hopefully maximise your lodgements whilst minimise your time.  Systemise as much as possible. Do this and you are a long way to maximising your cash in the bank! Good luck.

P.S. In a few months I plan to launch a new online training course that gives you an effective annual review and referral generation system… so keep an eye out for it.


Categories : Uncategorized
Comments Comments Off on Turnover is vanity, profit is sanity, cash is reality!

Give no more than 3 reasons for your recommendation!

Posted by Nov28, 2014 Comments Comments Off on Give no more than 3 reasons for your recommendation!
Print Friendly, PDF & Email

When making a loan recommendation to a client, how many reason do you give to justify that recommendation? You might cite the low interest rate, the features of the professional package, the banks service, turnaround times, borrowing capacity, free valuations, fee waivers and special offers and the list goes on. But new research suggests you could be doing yourself (and your client) a massive disservice.

In Robert Cialdini’s new book, The Small BIG he cites research that suggests the more reasons you give to why someone should do business with you or why you recommend a certain lender/product, the weaker the overall proposition. This might seem counter intuitive but the theory is that if I give 10 reasons for why a client needs to use Westpac it is difficult for the client to assess which reasons are the most important and which reasons are just ‘bells and whistles’. As such, the weaker reasons detract from the stronger reasons (i.e. the strong reasons don’t seem that strong anymore).

Let me give you an example. Assume my client David needs to borrow a certain amount, say $700k and whilst its clear he can clearly afford it, due to lenders credit policies there is only one lender that will prove a loan amount of $700k and that is CBA. So I tell David that I recommend CBA because they will give him a 1% discount in the pro pack, their service is good, they have an offset and they will approve the required loan amount. If you were David, which reason do you think is the most important – research says he’s likely to think all four reasons are equally as important. However, there really is only one reason why I recommended CBA. Adding in the CBA’s service is good for example weakens my recommendation.

A far stronger recommendation would be “CBA is the only lender than will approve a loan of $700k so we have to use them”. Doing so means that David will probably ignore the lower rate offer from Suncorp because he knows it won’t approve the required loan amount.

Therefore, think about the reasons you are recommending a lender/product and only mention the important reasons – no more than 3 reasons research says. If you have “10 reasons why you should use us” on your website, shave the reasons down to the top 3.

Of course, make sure the reasons are important to the client – mentioning that the lender has an offset will not help if an offset isn’t important to the client.



Categories : Uncategorized
Comments Comments Off on Give no more than 3 reasons for your recommendation!
Page 6 of 18« First...45678...Last »